Hong Kong Economic Outlook

August 20, 2019

The economic environment has markedly deteriorated as pro-democracy protests headed into their third month in August. Tensions have ramped up between protestors and police, disrupting economic activity in various sectors, notably including bringing the Hong Kong International Airport to a standstill on 12–13 August. The situation remains tense and the unrest is poised to continue rocking sentiment and generating uncertainty. Against this backdrop, the government unveiled a nearly USD 2.5 billion stimulus package on 15 August, which includes tax cuts and extra spending to bolster the economy. Meanwhile, the latest available economic data is downbeat: GDP growth lost steam in the second quarter, partly due to plummeting fixed investment, and the PMI dropped to an over decade-low in July.

Hong Kong Economic Growth

Hong Kong’s outlook was slashed this month amid a perfect storm of civil unrest, escalating trade tensions and deteriorating prospects for China. Disrupted activity and downbeat sentiment are seen causing GDP to grow at the slowest pace since 2009 this year. Our panel expects growth of 1.4% in 2019, which is down 0.6 percentage points from last month’s forecast, and 2.0% in 2020.

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